Firms forced to give more information to investors

The Government is to make it mandatory for all quoted companies to publish reports giving shareholders information on everything from past performance and future prospects to their policy towards employees, suppliers and the environment.

The Government is to make it mandatory for all quoted companies to publish reports giving shareholders information on everything from past performance and future prospects to their policy towards employees, suppliers and the environment.

Patricia Hewitt, Secretary of State for Trade and Industry, is today expected to confirm that legislation will be introduced requiring the UK's 1,290 listed companies to produce operating financial reviews (OFRs).

Her department will publish draft regulations and launch a three-month consultation period on them. The aim is to introduce legislation from the beginning of next year. That means that all listed companies will need to produce OFRs in time for their annual shareholders meetings in 2006.

Ms Hewitt is expected to tell a seminar organised by the Association of British Insurers and the Institute of Directors: "The OFR will improve the quality of the reporting and complete the corporate jigsaw to give investors a clearer picture. Shareholder engagement is a success where there is informed, healthy, open dialogue between investors and business."

Business organisations responded cautiously. John Cridland, deputy director general of the CBI, said: "Companies want to improve transparency and best practice but the Government must get the detail right if it wants to win business support. There must be nothing in there that exposes firms to unnecessary or draconian burdens."

However, Rosemary Radcliffe, an economist who has drawn up guidelines for directors on how to comply with the new requirements, said: "Hopefully, when the CBI sees the draft regulations, it will realise that the emphasis is very much on the directors' judgement as to what goes into an OFR."

Meanwhile, the Local Authority Pension Fund Forum, which represents £45bn of council pension funds, plans to confront a string of FTSE 100 companies about their environmental records to force them to comply with the Government's guidelines on disclosure. The organisation said it attended Amvescap's annual meeting last week to put it on the spot about its disclosure on carbon emissions, and will send representatives to the other AGMs.